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04/08/2012

Unlimited Campaign Spending—A Good Thing? Posner

The Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission held that Congress cannot limit expenditures in political campaigns as long as the spender, who might be an individual or an organization, including a corporation or union, is not affiliated with or acting in concert with the candidate or political party. The Court held that such “independent” expenditures are not campaign donations, which can be regulated; they are pure expressions of the political preferences of the donors.

Some of the expenditures are made directly by donors to buy political advertising, but most (84 percent of the roughly $100 million in such “independent” expenditures already made in the current presidential primary campaign) are given by the donors to political action committees (called “super PACs”), which channel the expenditures into political ads or other methods of influencing political opinion. This is sensible intermediation since the donors are unlikely to be knowledgeable about creating or buying or placing ads.

The Supreme Court allows donations to political campaigns to be regulated (and limited) because of fear that donations unlimited in amount corrupt the political process, because the candidate recipient knows that a donor of a large amount of money expects something in return, usually favorable consideration of a policy that would benefit the donor, and hence a large donation is likely to be a tacit bribe. But the Court, rather naively as it seems to most observers, reasoned in the Citizens United case that the risk of corruption would be slight if the donor was not contributing to a candidate or a political party, but merely expressing his political preferences through an independent organization such as a super PAC—an organization neither controlled by nor even coordinating with a candidate or political party.

The criticisms of the Court’s reasoning are several. First, the notion of “coordination” is vague, and tacit coordination with a candidate or a party seems to occupy the same never-never land as tacit collusion in antitrust law. It can be quite effective yet is hard to condemn as actual coordination. Allies of the candidate or members of the party can run the super PAC, and without even talking to the candidate or to party officials can figure out what kind of political advertising will be helpful to the candidate. Most super PAC advertising has been negative—that is, has attacked opponents of the candidate whom the super PAC favors—because positive advertising would be difficult without explicit coordination; the reason is that candidates tend to be vague and protean about what they favor, in order to maintain their freedom of action and reaction, so a super PAC could operate at cross-purposes with its favored candidate if it advertised in support of a program that it thought the candidate would favor. In addition, negative political advertising is usually more effective than positive.

It thus is difficult to see what practical difference there is between super PAC donations and direct campaign donations, from a corruption standpoint. A super PAC is a valuable weapon for a campaign, as the heavy expenditures of Restore Our Future, the large super PAC that supports Romey and has attacked his opponents, proves; the donors to it are known; and it is unclear why they should expect less quid pro quo from their favored candidate if he’s successful than a direct donor to the candidate’s campaign would be.

So the real question is whether campaign donations, in whatever guise, should be limited. There are two arguments. The first and less is that, as with brand advertising, advertising pro and con competing politicians tends to be offsetting; the argument is that if the contestants’ spending is limited, this will not affect the outcome of the contest but merely reduce its cost. But the argument is weak because it fails to account for the need of a new entrant to spend more heavily than incumbents in order to offset the cumulative effect of earlier expenditures. Even if the producer of some famous brand stopped advertising altogether, it would be years before consumers began to forget about the brand and stop buying it, but a new entrant would have no existing body of consumer good will to fall back on.

The stronger argument for limiting campaign donations is the corruption argument, which I have just suggested is as strong against the super PACs as it is against direct campaign donations. But again there is the concern with new entrants. If a candidate’s name is Bush or Clinton or Kennedy (and he or she is related to a former President who bore one of those names), the candidate enters a political campaign with an information advantage by virtue of belonging to a well known political dynasty extending over two or more generations (hence like an established brand). An unknown may need to spend more than one of those dynasts to pull even. Yet it hardly seems feasible to fix a limit on contributions and then raise it for new entrants.

That said, I think the emergence of new media in the Internet era make the corruption argument stronger than the new-entrant argument. The reason is that the Internet greatly reduces the expense of disseminating information, whether about a candidate or anything else. The number of over the air radio and television stations is limited and likewise the number of newspapers and magazines, but nowadays most people are getting their information, including political information, from social media, blogs, tweets, and other modes of communication, effectively infinite in number, accessible costly over cell phones, laptops, and other electronic devices. These technologies for creating, disseminating, and receiving information at very low cost should enable any candidate with a persuasive message to reach a large audience of potential voters, and should thus favor new entrants in political as in other markets—provided they are not allowed to be drowned by enormous expenditures by super PACs.

We saw the effect of the new information technologies at work in the 2008 Democratic primary season, when the relatively unknown Barack Obama defeated the much better known Hillary Clinton, and we have seen it again and more dramatically (consistent with the rapid expansion and adoption of these technologies) in the current Republican primary campaign. Michelle Bachman, Herman Cain, Rick Perry, Ron Paul, and Rick Santorum, none of whom was nationally prominent (Santorum had once been, but after his one-sided defeat for reelection to the Senate in 2006 had lapsed into obscurity), were able to compete effectively with the better-known candidates (Romney and Gingrich), and lost because of lack of support rather than lack of campaign funds. True, Santorum and Gingrich were both bolstered by super PACs, but they were hammered by Restore Our Future, thus providing a good example of offsetting “arms race” political expenditures.

But could it be that the more that is spent on political campaigns, the more informed the voting public becomes? This suggestion is hard to take seriously. Political candidates seem to have a very condescending view of the American electorate; almost no information is conveyed by political advertising. Debates and other campaign appearances provide voters with insights into the character and intelligence of candidates, but positive political advertising is largely a mode of hagiography, and negative of defamation.

Posner analysis is well reasoned, but refuted by the First Amendment: "Congress shall make no law . . . abridging the freedom of speech, or of the press . . . ." As Hugo Black so often reminded us, "no law" means "no law." Provided the message is not deliberately untruthful, the Congress cannot prohibit corporations, unions, or super PACs from paying for whatever political advertising they please. No objection, however, to Congress withdrawing any tax exemptions that such organizations presently may enjoy.

I'm probably going to get "whacked" on this one, but here goes anyway. ;) When I heard that the "S.C." was allowing Private Coffers of funds to be opened up and used in a fundamentally unregulated manner in election support; all I could think of was "here we go again"... Sounds an awful lot like the State of Florida and the "hanging Chad issue" in earlier elections...

In my mind, it appears that Common Sense and a sense of History is not a perequisite to sit on the Court. This whole situation is vaguely reminiescent of the German Army's secret and unregulated support of the National Socialists in the Teens, Twenties and Thirties. And we all know where that led... ;)

NEH may have set a new record: a Nazi reference in the second substantive comment! In any event, I don't understand how the two proposed analogies relate to the OP. Must be I lack common sense and a sense of history.

Posner writes, "Political candidates seem to have a very condescending view of the American electorate; almost no information is conveyed by political advertising." Perhaps he is correct, but it is also worth mentioning that many of the most vocal critics of the Citizens United decision (including some of our nation's most prominent liberal law professors like Laurence Tribe, Lawrence Lessig, Erwin Chemersinky, etc.) have an extremely dim view of the electorate.

While much of Posner's discussion focuses on the desire by some to use restrictions on campaign spending as a forward defense against corruption, the opposition to the Citizen's United decision within the legal academic community has much to do with the desire to "level the playing field" in the arena of political speech (a desire recognized by Supreme Court justices Breyer, Kagan, and probably by Ginsburg and Sotomayor as well). They worry that unlimited campaign spending will favor corporations and pro-market or pro-business political messaging (which generally favors conservatives) and that corporations can use their money to drown out opposing views. Their fears are not really supported by empirical evidence.

For all of the rhetoric about "anonymous" and "unaccountable" corporate donations to super PACs and attempts to characterize the Citizens United decision as the "corporations are people" decision (a talking point echoed by media personalities like Jon Stewart and Stephen Colbert), super PAC money has largely been donated by wealthy individuals who make no secret of their contributions. Such donations were legal even before the Citizens United decision.

Implicit in the exaggerated but earnest fears over corporate influence in campaign spending is the belief that regular Americans are so dumb that they cannot be trusted to tell fact from fiction or adopt healthy skepticism of campaign ads. It is yet another manifestation of liberal condescension exemplified by the Marxist notion of "false consciousness," the popularity of John Galbraith and Noam Chomsky, and the revival of false consciousness in regulatory policy through the works of Cass Sunstein and behavioral economists (where false consciousness is recast as cognitive dissonance).

Although they doubt the intelligence and competence of regular Americans, these individuals have very few doubts about their own intelligence and competence. Many law professors, political scientists, and journalists believe that they should be the dominant opinion makers in the realm of public policy, and they don't want the headache of having to compete with pro-market messaging supported by corporations or wealthy individuals.

Many critics of the Citizens United decision within academia and journalism worry about the potential for "unbalanced" campaign spending. Do these same people worry about the political bias of law schools, political science departments, and the mainstream media? Would they advocate "leveling the playing field" in order to prevent conservative viewpoints from being drowned out? Hardly.

Dave, study the details of finance and the development and rise to Power of the National Socialists. Does Krupp, Fockewulf, Messerschimt, BMW, I.G. Farbin, Seimens and a host of others both Corporate and Private ring a bell? All private and secret and not so secret funding operations which were unregulated and controlled by the Wiemar Republic which spelled its eventual downfall and doom. Sound vaguely familiar? ;)

TANSTAAFL: The Court rejected Black's categorical view of the First Amendment eons ago. Con Law 101. Of course, your recognize this as your very next sentence carves out an exception for laws restricting "deliberately untruthful" speech.

One issue with the corruption issue is how does the government regulate the corruption from the media and newspaper corporation.

The majority of the voting public will get their information from the major television networks and cable news networks, which get their information from large corporations that run the newspapers. These entities have a vested interest in the consolidation of political power since it lowers cost and increases influence. Why else is Katie Corric making more per year than most CEOs? How would one propose a candidate overcome this corruption?

I would hypothesize that the current present did well in the last election not so much for the general electorate perusing internet website to get an accurate and objective representation of his qualifications compared to the other candidates as compared to the representation of him by these large media corporations compared to their representation of the other candidates.

Some well educated and intelligent people actually believe that Sarah Palin said that she can see Russia from her house.

Mike, In my books, "Truth" is still an absolute defense in terms of Slander and Libel. Although, at times, there may well be a greater absolute Wisdom. ;) But, in the heat of a Political Campaign "truth" is of little consequence and goes far in "mudding the waters" and "poisoning the well" for private and corporate gain...

Set aside Con 101. There is more to First Amendment law than what is taught in law schools. The absolutist view of the First Amendment as it relates to free speech has never gone away. A well publicized Supreme Court decision in the 2010-2011 term (not that boogie man Citizens United, decided the term before) illustrates the fact.

Suppose, as I do, that all politicians are corrupt or at least imminently corruptable. If we provide the electorate the information to indicate whether that corruption points in a favorable direction or not, we eliminate the problem at hand.

We can replace the current system with the requirement that each candidate has to maintain a web site listing every penny contributed, and by whom. (As a check, we could go further and demand similar disclosure of how every penny was spent.) The press and wonks will comb it by the minute. If we see that a candidate got $10 million from Osama bin Laden, we can form a reasoned opinion, not about whether but about what kind of corruption we are in for with that guy in office. This cuts both ways. If Rick Warren's followers see that he has personally donated to a candidate, they will tend to want to support the same guy (or gal).

I would further like to see a system in which only individuals can contribute. A corporation is a creature of law, and as such, can be defined in the law in any way we want. We have historically analogized a corporation to a fictional person, but we can choose to define it as a person who has no right to speech. So, despite my well-recognized leanings I thought Citizens was pretty silly.

One thing we can do to level the playing field of donors is to make political donations come from after-tax money. If you really want to support a candidate, do it with money on which you have already paid taxes instead of using the deduction to have the government subsidize your views. I believe this would dry up corporate donations in a hurry, at their 46% tax rate. To placate those who want to encourage the electorate to get involved, we could say the first $100 in donations per tax year is deductible. That way a guy who can only afford to donate $100 gets exactly the same break as a millionaire, without impinging on the millionaire's right to spend his after-tax dollars as he sees fit.

NEH may have set a new record: a Nazi reference in the second substantive comment! In any event, I don't understand how the two proposed analogies relate to the OP. Must be I lack common sense and a sense of history.---I agree

Spender, who might be an individual or an organization, including a corporation or union, is not affiliated with or acting in concert with the candidate or political party. The Court held that such “independent” expenditures are not campaign donations

The ideals of the First Amendment are so clear when seen from above yet things become murky when looking at it on the ground.

I am not so certain that the internet necessarily removes barriers. Money can be used to affect the internet as much as it can affect traditional media through the use of targeted internet based campaigns.

More fundamentally I have two thoughts:

1) Why should "corporations" as such have any right to "speech" at all. They are limited-liability organizations created by the state for commercial purposes. They are an investment vehicle that bestows the benefit on their creators of limiting their liability to only the amount invested (barring extreme circumstances when the corporate veil is pierced). The individual investors or managers or agents should have that right as "individuals" but the "entity" should not be anthropomorphized.

2) That being said then it actually seems that one of the problems with the super-PAC's is the lack of transparency that is now almost a feature because of the supposed "non-coordination." What about a more "market" based approach. Instead of regulating the amounts spent allow unlimited expenditures however require that they be only from individuals and that the names and amounts must be disclosed. Further, take it a step further that whenever an organization engages in direct political speech in support of a candidate that the individual names of the owners and donors to that organization must be disclosed as well. Thus you capture not merely "direct" contributions but the "indirect" ones that also lend to the appearance of corruption.

The one problem that I can see with this is the fact that anonymous dissent has its value. Perhaps there might be a reasonable way of shielding such dissent. Perhaps the reach of this disclosure would only include the public airways and the press.

Corporations are state-created actors. The original (and continuing) basis for them is to encourage economic activity through the use of liability imitations. In fact, initially such a grant was limited to large scale capital investment such as building canals or roads. However anyone with a mailing address and a few hundred dollars can "incorporate" for any business purpose. Of course, this structure has the additional benefit of allowing for the creation of fungible ownership interests which increase liquidity (i.e. allows the easier sale of shares) and thus further encourages capital investment. Why should should an investment vehicle be given constitutional rights commiserate with individuals? If those rights are sought, the veil should be pierced to reveal the true interests at stake.

Posner's dim view of the American electorate is well supported. Consider how many people think that increased drilling for oil will affect gasoline prices in the near future. Consider how many people truly believe, on the basis of no substantial evidence, that Obama is a Muslim. Consider the bumper sticker that exhorts the Feds to keep their hands off "My Medicare". Both Dems and Reps exhibit the same justified contempt by insisting that the elderly "earned" their entitlements.

But there's no cure for this in the manipulation of limits on campaign spending. And the need for new contenders for office does argue against them.

Put the disclosure requirement on the campaign organization. If they are aware of the group that is supporting them then they are the ones who need to come forward with the names and information. This is a much stricter standard than mere "coordination"and certainly easier to prove. A truly anonymous donor would be able to protect his/her identity by simply never revealing themselves to the candidate at issue. This would eliminate the "corruption" problem. Yes people would still try to get around it but a failure to disclose would create liability for the candidate and potentially the "anonymous" donor. If you truly wanted to be "anonymous" you would take steps to truly avoid disclosure.

Again, not perfect but a somewhat clearer standard than the vague issue of "coordination" and easier to police.

George, This is only the first year of it. Give them time. Ever heard of "Shell Co.'s and individuals" and the "Art of Money Laundering"? I'm waiting for Donors too start showing up who have been dead for the last hundered and fifty years... ;)

Here in Chicago we're still trying to chase them off the voter registration rolls. Remember, "Get out and vote and vote often and we'll make it worth your while... BTW, who's your Precinct Captain"! :)

Posner argues that "the emergence of new media in the Internet era make the corruption argument stronger than the new-entrant argument." His position seems to rely upon the view that because social media, blogs, tweets, and other modes of Internet communication are cheap, they can be overwhelmed by SuperPAC spending. If this were true, then we should also expect Internet spam to be a highly persuasive form of advertising, which it isn't.

The Internet does make communication cheap, but this by itself doesn't make the people who post blogs and tweets cheaply available. This is a significant point to understand, because it is these people, not saturation messaging, that makes cheaply distributed information valuable to Internet consumers. This also makes it very hard to influence them, because compared to television, where the TV stations are few in number, how do you influence thousands of twitters, bloggers and Internet news aggregators? It's a very hard task, even for commercial advertisers who have the most expertise in this area. Throw in the additional difficulties of political advertising over mere brand advertising and it becomes an even harder nut to crack. Finally, it only takes a matter of a little Internet research to show that Posner's argument is false. For instance, SuperPACs despite all their spending have little observable influence over popular Internet commentators with a political interest, be it the Drudgereport, George Takei's Facebook feed, or others.

Posner is right on one thing; all the spending on campaigns generates a lot more "heat than light".

There's an obvious reason in that the last thing a candidate wants to do is take a position. Strong on gun rights? He's alienated a large sector. A position on abortion? Another sector alienated. With perhaps the exception of primaries the best "campaign" is the warm and fuzzy "He's a jolly good fellow" and of course what the corpie funded super pacs are supposed to do is outspend the opposition by creating fear, doubt, uncertainty and negative innuendo.

Thus we spend billions learning next to nothing about the candidate and less about anything remotely resembling a platform. In 2000 when what should have been a controversial tax cut benefiting primarily the wealthy (to unknown "benefit" to all) George Bush, even in a debate setting got away with answering a question of "Why 33%??" with a mumbled "I don't think anyone should pay more than one third of income". No follow up, no further detail, nothing pertaining to how they'd avoid deficits. A pass on one of the most important issues in a campaign for the highest office in the land.

And things are to be improved by unlimited corporate spending with self-selected candidates not even vetted by a party platform advancing in the primaries, perhaps as Gingrich with support from a billionaire Las Vegas "angel" footing much of the tab? This is likely to help "keep" our representative republic?

NEH is right to worry about corporate fascism. Today it seems the whole generation has been "taught" that the corporations are answerable only to their stockholders -- with that being a fiction too as the "stockholders" range from an uncaring mutual or retirement fund to "ownership" measured in nano-seconds by program traders.

No, in an earlier and better time a corporate charter was awarded to a company and it was expected that the corporation would be beneficial to the community and live up to obligations beyond that of carving off the fastest buck.

After what recently took place with Lehman rightly being left to bankruptcy, after the rescue the likes of AIG and Goldman should have been split up with their assets sold off and charters revoked. A message about corporate governance would have been sent and out of the ashes would rise new and smaller companies that might even compete.

Instead, both, and others emerged nearly unscathed and if they desired could speak in a very loud and moneyed "voice" in the selection of the next President, Congress and state legislatures to "govern" them.

Amid these monsters what "voice" remains for those in the P20, P40, or even P60 quartiles??